As a small business owner, you may be able to contribute to your own Gusto 401(k) plan — but how you participate depends on how you get paid. This article explains the two types of owner-participants and how each can make contributions.
As the owner of a sole proprietorship, partnership, limited liability company (LLC), or S-corp, you may be able to participate in your company's 401(k) plan. Your eligibility depends on the type of income you get.
There are two categories of owner-participants:
W-2 employees — Owners who are paid a salary through payroll (like S-corp and C-corp owners)
Self-employment income (SEI) earners — Owners who get guaranteed payments or self-employed income and are not issued a W-2
If you are a W-2 employee — including S-corp and C-corp owners — you make deferrals up to the annual deferral limit through payroll. Employer match and profit-sharing contributions are made at the same time as other employees in the plan.
If you are an SEI owner who is not issued a W-2 and you get guaranteed payments or self-employed income, you are still bound by the annual deferral limit. You can defer up to the annual limit or 100% of guaranteed payments per year, whichever is less.
SEI owners can contribute in two ways:
Make owner contributions directly within your Gusto 401(k) participant dashboard
If you have a deferral rate set, apply that rate to guaranteed payments you get in payroll, as long as your company is an eligible entity type that allows owner contributions
Elective deferral contributions based on self-employed income (as reported on K-1 or Schedule C) have specific deadlines:
You need to elect contributions by Dec. 31 of the applicable year.
Contributions need to be made to the plan before Mar. 15 for Gusto 401(k) plans.
This information is provided for general education purposes only and does not take into consideration your specific circumstances. You should contact a tax professional to determine what types of contributions you are eligible to make to your company's 401(k) plan.